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All trades must be cleared by a clearing house or firm. Investopedia defines a clearing firm as, "An organization associated with an exchange to handle the confirmation, settlement and delivery of transactions, fulfilling the main obligation of ensuring transactions are made in a prompt and efficient manner."

There are a large number of clearing firms (see this list from the CME Group), and with online brokers, especially larger ones, it is very common for them to self-clear. By self-clearing trades, brokerages can cut costs and increase their margins. The savings are fairly significant.

Here is a list of the clearing firms used by the following online stock and option brokers.

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